A Lake Forest-based subsidiary of Panasonic Corp. that provides in-flight entertainment systems agreed to pay $280.6 million to settle a case brought by federal prosecutors and regulators regarding a violation of the Foreign Corrupt Practices Act, authorities announced Monday.
Panasonic Avionics Corp. will pay a $137.4 million criminal fine to settle charges related to a scheme to keep consultants for “improper purposes” and to hide payments to third-party sales representatives, according to the U.S. Department of Justice. For two years, an independent monitor will oversee compliance with implementing reforms.
The company will also pay about $143 million to the U.S. Securities and Exchange Commission.
“We are pleased to have resolved these investigations,” Hideo Nakano, the chief executive of Panasonic Avionics, said in a prepared statement. “We have taken extensive steps over the past few years to strengthen Panasonic Avionics’ compliance programs and internal controls, and we welcome an independent compliance monitor to assess our progress.”
The consultants in question did little or no work for the company and were hired through a third-party provider with no “meaningful oversight” by the company, prosecutors said.
One of the consultants was hired while still working at a state-owned airline while also involved in negotiating a “lucrative contract” between the airline and Panasonic, prosecutors said. The consultant was paid $875,000 over six years and Panasonic took in more than $92 million in profits through the contract, prosecutors said.
Panasonic employees in Asia hired sales agents, who failed to pass company requirements, to work as “sub-agents” of a separate company, hiding in the process more than $7 million paid out to at least 13 sub-agents, prosecutors said.